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Perspectives on Competition
by Aaron Kleiner

At the macro-level, we, by-in-large, are all in favor of competition -- the cornerstone of the free market economy. It is not only in the West, but now with Perestroika in the Soviet Union and the opening up of markets in China also in the East, that competition is viewed as the engine that drives economic progress.

At the micro-level, the level of the entrepreneur, competitors are usually regarded as bitter enemies with "survival of the fittest" being the underlying principle and "market share" being the dominant goal. The most dreaded event is the announcement of "killer competition," that product which so underprices or outperforms your product as to endanger your company. It is not the reality of competition that drives the free market economy but rather the paranoid fantasies about what the competition may have in the wings that is the real stimulant to creative energy. The flames of these fantasies are fueled by rumors and fanned by customers all too anxious to get better prices and higher performance. At the individual level, it is easy to have a very negative perspective on the value of competition.

There is in the emergence of high technology companies a stage in which competition can be very valuable and competitors should be valued. I recall the early days of a company where I worked which introduced a new technology, developed the market on its own and had no competitors. Prior to one trade show, we heard that a competitor had rented booth space at the show and would offer a competitive product. Our marketing department was overjoyed finally the market would be legitimized and someone else would be helping in the awesome task of convincing customers that the time to buy had arrived.

At the early stages of a new market, it is far more important to establish credibility with customers and to make sure they feel that there are multiple reliable vendors who can service their needs than to engage in cut-throat competitive practices. You are not only building a company but you, allied with your competitors, are creating a market. Expanding the pie is as important as getting a fair share. On the other hand, Texas Instruments certainly did not help Bowmar develop the hand-held calculator business.

Maintaining a balanced view of the potential benefits and the potential dangers of competition is a challenge and the perspectives need to change as the company and market grow and develop.

Reprinted with permission from The MIT Enterprise Forum, Inc. of Cambridge. The article first appeared in the "Forum Reporter," Volume 7, No. 8, April 1989.

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